The last few weeks have been particularly trying as a series of harrowing events have rattled the world. Between the destruction from Hurricane Helene stateside, escalating unrest in the Middle East, and the brief possibility of a supply chain crisis looming at our ports due to the Longshoremen striking, we’re clearly navigating through turbulent times.
Hurricane Helene’s Destructive Path
Making landfall as a Category 4 storm, Helene unleashed severe destruction across multiple states in the Southeastern U.S., resulting in tragic loss of life and widespread devastation. The death toll has risen to at least 202 people across six states.
Surprisingly, it was not Florida that bore the brunt of the storm, but North Carolina, which has taken the worst of it. Asheville (and other cities in the Blue Ridge mountains) was devastated as rivers were overwhelmed by nearly 30 inches of rainfall. The photos are almost incomprehensible, with roads completely washed away, houses flattened, and giant trees snapped like twigs. Rescue teams are tirelessly working to locate missing people and deliver essential supplies. However, communication with some rural areas remains challenging due to a lack of cell service.
North Carolina Governor Roy Cooper expressed the gravity of the situation: “We know there will be more fatalities.” It is a sad but honest assessment as hundreds more are still missing. Many in N.C. lack access to clean water, and nearly 1.5 million customers are still without power across all the affected states.
In addition to the human tragedy, the economic impact will be substantial, with early estimates suggesting tens of billions of dollars in damages. The interruption to local economies is likely to be felt for years. Even more concerning, the vast majority of impacted households did not carry flood insurance, making their personal recovery even more difficult.
Middle East Tensions Rise
Beyond our domestic challenges, international tensions have escalated sharply in the Middle East. Iran fired approximately 200 missiles at Israel in retaliation for recent strikes that have taken out much of Hezbollah’s top command in Lebanon. Fortunately, most of the missiles were either intercepted or missed their targets. However, this significant escalation raises concerns about a broader regional conflict.
The United States, working to avert a wider regional war, actively supported Israel’s defense. President Biden credited intensive planning between the U.S. and Israel for parrying the barrage: “Make no mistake, the United States is fully, fully, fully supportive of Israel.“
In a show of that support, the U.S. has increased its military presence in the region to help deter further attacks and defend Israel. Additional air defense capabilities have been deployed, including jet fighters and naval vessels equipped to intercept missiles.
As the first-anniversary approaches of the horrific October 7, 2023, terrorist attack on Israel, we can only hope that conditions improve over the next year.
The Longshoreman Strike
Adding to the week’s turmoil (at least temporarily) was the ongoing Longshoreman strike affecting all major U.S. east coast ports. Thousands of dockworkers from Maine to Texas went on strike in the first coastwide walkout by the International Longshoremen’s Association (ILA) in almost 50 years. This raised alarms about significant disruptions in the supply chain, as ports are critical nodes in global trade.
At the heart of the strike is the ILA’s demand for a 77% wage increase, aiming to raise the base hourly rate over six years from $39 to $69. Union leaders argue that while some dockworkers in busy ports like New York and New Jersey earn six-figure salaries, thousands in ports across Virginia, Florida, and Texas earn far less due to lower pay scales and less busy ports.
The strike threatened to have a cascading effect on the availability of goods as retailers fear shortages ahead of the holiday season, manufacturers anticipate delays in essential components, and consumers may see price increases as supply diminishes.
The good news is that both sides tentatively agreed to a new deal late Thursday evening. The new agreement, which would provide a 62% wage increase over six years, is robust. However, what needs to be added to most of the headlines is that this deal only extended their current contract through January 15, 2025. While they will return to work in the interim, we may find ourselves talking about this again in three months. And that is because the other central negotiating point for the ILA concerns automation, which they are vigorously fighting.
Navigating Through Uncertainty
This has been a week of profound challenges. Our deepest sympathies are with those who have lost loved ones at home and abroad, and we remain hopeful that those most in need will get the help they require.
In times of uncertainty, informed perspectives and proactive strategies become invaluable. Given the confluence of these events (along with the election looming a month away), markets are likely to be volatile. Nevertheless, it’s vital to stick with your plan. As always, we’re here to help navigate these complexities together.
Economy
- Despite the turbulent times, markets ended the week on a positive note. The S&P was up 0.2%, the Nasdaq was up 0.1%, and the small-cap Russell 2000 was down -0.5%.
- The number of job openings rose by 329K to 8.040 million in August from an upwardly revised 7.711 million in July and above market expectations of 7.655 million.
- The U.S. economy added 254K jobs in September, much higher than an upwardly revised 159K in August and well above forecasts of 140 K. This is the strongest job growth in six months.
- The unemployment rate in the U.S. fell to 4.1% in September, the lowest in three months. It was down from 4.2% last month and surprised the market, which had forecasted the rate to remain unchanged.
Stocks
- U.S. equities were in positive territory. Energy and Financials were the top performers, while Consumer Staples and Materials lagged. Value stocks led growth stocks, and large caps beat small caps.
- International equities closed lower for the week. Emerging markets fared better than developed markets.
Bonds
- The 10-year Treasury bond yield increased 23 basis points to 3.98% during the week.
- Global bond markets were in negative territory this week.
- High-yield bonds led for the week, followed by corporate bonds and government bonds.
